Our industry’s rich history is one of gold rushes, wild market rides, and boom and bust production cycles. Many gold miners have faltered trying to outsmart and outpace the markets.

Agnico Eagle has been a successful mining company for almost 60 years now. And while we’ve had our share of exciting times, our success has come from taking the long view, and understanding that pace and balance are the keys to managing our business.

While 2015 was a year of turmoil for our industry, Agnico Eagle achieved another year of record production and safety performance. Our stock significantly outperformed the gold markets and we reduced our net debt, while also improving our financial flexibility.

We continued to execute on our business strategy of delivering high quality growth while maintaining high performance standards in health, safety, environment and social acceptability; building a strong pipeline of projects to drive future production; and employing the best people and motivating them to reach their potential.

Delivering on growth expectations, while maintaining high PERFORMANCE standards
We have taken steps to grow our production base by optimizing our existing mines and projects in our four current operating regions. This approach provides us with growth we can execute on, at mines that are up and running, at projects we already own, and in jurisdictions we’ve done business in for many years. It also allows us to grow our business, without taking on additional risk, and ensure it will be just as manageable in the future as it is today.

It was the safest year in our Company’s history with fewer lost-time accidents, and with three of our sites – La India, Meadowbank and Meliadine – recording zero lost-time accidents. It is encouraging to know that while Agnico Eagle is getting bigger, we are also getting safer, which is a testament to our people and our business.

For the fourth year in a row, our operations exceeded their production targets – allowing us to increase our guidance to the market and lower our costs. Our sites also benefited from the impact of lower Canadian, Euro and Mexican currencies, as well as lower oil prices.

Building and maintaining a high quality project PIPELINE
Our strong performance has allowed us to further invest in our exploration and development pipeline, which represents the long-term future of our business.

We doubled our exploration budget in 2015 with excellent results at each of our operations and projects. We have now reported an initial mineral resource at our El Barqueño project in Mexico, while drilling at Amaruq yielded a 119% increase in inferred mineral resources. At the Kittila mine in Finland, increased exploration activity contributed to the discovery of the new parallel Sisar Zone, which is expected to be a significant contributor to our production profile in the years to come.

We also advanced our Nunavut Strategy, which encompasses our Meadowbank mine, the Meliadine advanced development project, and our gold discovery at Amaruq. Together, these properties have the potential to transform our business, and the future of Nunavut, for decades to come.

Specifically, we agreed to proceed with expansion of the Vault Pit, extending Meadowbank’s mine life into the third quarter of 2018. This will help bridge the gap between the end of production at Meadowbank and the potential start up at Amaruq. Engineering and environmental baseline studies also got underway to support the permitting process for Amaruq. In late 2015, we received approval to construct an all-weather exploration access road linking Meadowbank to the Amaruq site.

We are attracted to this Arctic frontier because of its vast mineral potential, as well as for its welcoming spirit. It is a jurisdiction that understands gold mining and the benefits it can bring to the region. While we have a realistic understanding of the challenges presented by this remote environment, we also have access to the right people, skills and resources from our Abitibi and Meadowbank camps. As we establish a bigger production base in the region, we will be able to take tremendous advantage of the economies of scale.

Our consistent and steady approach has reinforced trust between our employees, communities and Inuit stakeholders. In 2015, for example, the Kivalliq Inuit Association (KIA) and Agnico Eagle signed an Inuit Impact Benefit Agreement (IIBA) for the Meliadine gold project – one that challenges us to further increase Inuit participation in the workforce, and helps the Inuit in Nunavut to build a solid future for themselves and their families.

Employing the best PEOPLE and motivating them to reach their potential
We have one of the most skilled teams of professionals in the industry. Our goal is to further develop our leadership team and prepare them to take on increasing responsibility as the size and complexity of our business increases.
To ensure our organization is prepared for growth, we are investing in our people by enhancing our leadership development program for our next generation of leaders; providing increased opportunities and responsibilities for career development; and, by expanding training and development opportunities at all levels of our organization. As we advance towards our 60th year in business, we recognize that the Company was built on a strongly committed workforce. This is a crucial element in Agnico’s strategic plan for the future.

We welcomed back Ammar Al-Joundi and appointed him to the position of President of Agnico Eagle. Ammar previously served as our Senior Vice-President and Chief Financial Officer. Regretfully, Bernard Kraft resigned from our Board due to health reasons and we will miss his financial knowledge and expertise. Jamie Sokalsky was appointed to the Board to fill this vacancy. Jamie served most recently as President and Chief Executive Officer of Barrick Gold Corporation.

IMPROVING outlook for gold
We believe the climate for gold is improving and that gold will perform better than the rest of the metals industry in 2016. The lack of investment in exploration and sustaining capital across the industry is impacting production, and the decline in supply is expected to drive up the price of gold over the next several years.

This view is contrary to current market thinking, but already we are seeing more interest in gold because there is so much uncertainty and debt in the financial system. While the gold price is largely influenced by the “paper markets”, it is ultimately physical demand that matters most when the financial markets are uncertain. We see continued strong demand from China and India, and from the central banks in Russia, China and elsewhere.

REMAINING focused on our Strategy
As we move into 2016, we remain focused on growing our production base and investing in our exploration and development projects. While the industry as a whole is struggling, Agnico Eagle is well positioned to take advantage of the improving outlook for gold. We will continue to execute on our business strategy and maintain our high performance standards, while investing in our ideas, our people and our future.

 

Sean Boyd
Vice-Chairman and Chief Executive Officer
March 15, 2016